The “Green Knife”: Identifying Sustainability Value Drivers Within a Company
Very few companies are purely “green” or purely “brown”.Most businesses operate across a mix of sustainable, transitional and legacy activities. This creates a fundamental strategic question for boards and investors: Which parts of the business actually create long-term sustainable value? And how much of the firm’s enterprise value is driven by those activities? Traditional valuation […]
A Valentine’s Case Study: Setting a Defensible Share Transfer Price
This Valentine’s Day, we look at parental love: a family-owned services company transferring shares from one generation to the next. The question is not lovey-dovey, but practical: How do you set a defensible transfer price that auditors and tax authorities are comfortable signing off on? Unlike a strategic M&A transaction, this requires a focused valuation […]
Impairment testing case study: A construction SME under margin pressure
Impairment testing requires careful professional judgement. As this case study highlights, when assessing the value of potentially impaired assets, the devil is in the detail. Using a construction SME, we guide you through the key steps required to apply a value-in-use (VIU) approach under IAS 36 / FRS 102. Introducing Construction BV This stylised case […]
How ESG-focused fund managers improve the price discovery process
While fund managers’ ESG considerations are often considered a “labelling” exercise, a recent paper in the Journal of Banking and Finance suggests it can actually help the price discovery process. And, in doing so, improve the cost of capital for greener companies. What the Study Looks At The paper by Avramov et al. (2026) studies […]
The Intersection: Five Practical Steps to Integrate Sustainability into AIF Valuations
How ESG risk is becoming an AIF valuation variable Valuation teams across Europe are realising that sustainability risk is no longer a disclosure topic — it’s a fair-value issue. Under AIFMD and the EU’s sustainable-finance framework, fund managers must now demonstrate that material environmental, social, or governance (ESG) factors are reflected not just in policies, […]
Carbon emissions & Valuations
How can company valuations incorporate carbon emissions?A seminal paper by Bolton and Kacperczyk (2021), Do Investors Care About Carbon Risk?, offers valuable guidance. The authors examine stock returns in relation to firms’ Scope 1, 2, and 3 emissions, with two notable findings. 1. Absolute emissions matter to equity investorsHigher levels of Scope 1, 2, and […]
Machine learning on ESG & corporate valuation
Academic research into sustainability drivers of corporate valuation is increasingly moving into the field of machine learning.A recent paper by Turkish researcher Murat Doğan and colleagues is a good example. It concludes that: The authors’ preferred approach, the Random Forest Model, produces predictions on the relative importance of different factors, illustrated in the accompanying pie […]
Carbon data & bankability: Why financial institutions are getting serious about CO₂ intelligence
Over the past years, the finance community has become a growing consumer of companies’ carbon information – both at the corporate level and, increasingly, at the level of products and services. Why is such CO2 data relevant to investors and banks? The immediate answer is to point out that “They have to consider it”. Indeed, financial regulation […]
Leaders & Laggards: ESG & valuations
We are often asked around the importance of ESG data in company valuations. When does sustainability come out most prominently in valuation assignments? It is typically one of two types of companies: There are likely also firms that are middle of the pack, in between 1 and 2. For them ESG data points are helpful […]
EU Taxonomy impact on shareholder value
EU Taxonomy impact on shareholder value The EU Taxonomy marked one of the first legislative attempts to set a commons standard for the “greenness” of a company. Seeking to elevate this from more subjective interpretations. When it was first announced in 2017 investors, it seems, took notice. According to a study by Bassen et al. […]